A ports industry leader is leading the call for the Government to expand its plan to create freeports across the UK.
Richard Ballantyne, Chief Executive of the British Ports Association (BPA) says the demand for freeports across the UK was such that the initial plan to create 10 will come nowhere near to satisfying that demand.
Addressing members of Mersey Maritime in a Face-2-Face online event during May, Mr Ballantyne said there were 125 cargo-handling ports across the UK at airports and rail hubs, many of whom may be expected to apply for freeport status. He also said the introduction of freeports, fully backed by Mersey Maritime, presented a huge opportunity for the offshore wind sector as the UK Government looks to significantly increase the volume of energy generated from renewable sources.
During the session, Mr Ballantyne also talked about how the coronavirus epidemic and subsequent lockdown had impacted on the ports sector. Passenger ferry operations and container shipments from Asia were among the areas worst hit, he said.
Freeports are a designated zone where normal tax and customs rules do not apply. These can be airports or other hubs as well as maritime ports. At a freeport, imports can enter with simplified customs documentation and without paying tariffs.
Businesses operating inside designated areas in and around the freeport can manufacture goods using the imports and add value, before exporting again without ever facing the full tariffs or procedures. If the goods move out of the freeport into another part of the country, however, they have to go through the full import process, including paying any tariffs.
The Port of Liverpool was a freeport until 2012 when the zones were abolished by the then coalition Government. The idea has the support of Liverpool City Region’s £4bn maritime sector. Representative body Mersey Maritime is backing the policy as is Port of Liverpool operator Peel Ports.
A report by consultants Mace, estimates a freeport in Liverpool could add £739m to Liverpool’s economy every year – equivalent to £1,500 for every household in the city – as well as creating 12,000 high-value jobs.
The Government has started a consultation process which has now been extended to July due to the coronavirus crisis. Following that, it is expected formal bids will be invited in the autumn. And Mr Ballantyne is calling on the Government to scale up its ambitions.
“We are calling for maximum ambition from the Government in terms of the scope and the scale of freeports… we are asking for the limit of 10 to be raised to take into account the level of interest,” he said. “We are looking for an open and inclusive policy. The Government is still committed to freeports so I also think there will be some financial support – some modest sums to make sure the policy is a success.”
And on the opportunity for offshore wind, he added: “The Government has said that 60% of future offshore wind production has to be rooted here in the UK so, together with the freeports policy, it provides an economic stimulus that offshore wind manufacturers can benefit from.”
Mr Ballantyne spoke to members about how the COVID-19 crisis had impacted on the ports and associated businesses sectors. He said ferry and cruise companies had been hard hit with the tourism market grinding to a halt. He also added that Ro-Ro shipping operators had seen a reduction in business and had, in some cases, made staff redundant or stood them down under the Government’s employee furlough scheme.
“We also saw a complete shutdown of container shipping from Asia for a time. There has been a 20% decline in volumes from Asia to Europe, mainly from China,” said Mr Ballantyne. “And we have also seen a big shutdown in manufacturing as well as (non-food) retailers closing. There was an impact on fuels, too. A lot of cargo traffic is oil and gas-related.”
Mr Ballantyne said all of the above had put pressure on port revenues and, in the initial weeks of the lockdown, staff absence levels were as high as 8-12%, although this had now fallen back to 0-3%.
“Ports generally have good asset bases,” he said. “But there has been a lot of pressure on ports to waive rents for their commercial tenants and that has created cashflow issues for some.”